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Limited by budget example from manual, please explain

[ Edited ]
Collaborator ✭ ✭ ✭
# 1
Collaborator ✭ ✭ ✭

I am learning today from the example from this page : link

 

When I expand "troubleshooting" it says : 

 

Example

Let's say you set a bid of $1 and a daily budget of US$100, and your campaign is getting about 200 clicks and spending US$95 per day (it isn't “limited by budget”). Then, you set a bid adjustment that results in a +100% increase for searches in Chicago on mobile devices, or a resulting bid of US$2.00.

Since your increased resulting bid causes your ad to be eligible for more auctions, you would need to spend US$150 to acquire all the possible clicks for your newly available traffic. But if your daily budget remains US$100, your traffic will be "limited by budget." This means that the increase in your resulting bid might increase your cost-per-click (CPC). And, if your daily budget isn't changed, you might decrease the number of clicks your ads can get.

 

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What I understand : if the bid is 1 $ and the clicks are 200 with a spend of 95 $ , the resulting avg. cpc is less than 0.5 $ , The avg. cpc is 2 times less than the bid .

 

So if the bid adjustment for mobile is raised to 2 $ , it shouldn't render the campaign limited by budget because the avg. cpc could be the same 0.5 $ due to low competition. Even if we set the bid from 1 $ to 5 $ , the avg. cpc. should not be affected and the campaign should not become limited by budget, am I understanding things wrong ?

 

1) Does doubling the bid also automatically mean doubling the avg. cpc. ? 

 

2) Can a high 4x bid adjustment on a location (like a capital) make the daily spent larger than 120% of the daily set budget ?

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Marked as Best Answer.
Solution
Accepted by topic author Adrian B
September 2015

Re: Limited by budget example from manual, please explain

Rising Star
# 4
Rising Star

1) What this example is telling you is that there was traffic available for the search that was not available for a bid of $1.  When the bid was raised to $2, then the ad was able to compete for some of that traffic. Not all advertisers are able to spend the same amount--to offer the same amount for clicks. Ad serving is tiered to allow smaller (but still quality) campaigns to compete.

 

Aside from that, it's a mistake to assume that your keyword bid is what you'll pay for a click. Your keyword bid caps what you pay for a click. If you search for information on the ad auction (for example, here), you'll find a lot of good explanations on why your keyword bid and what you actually pay for a click can differ.

 

2) No, a bid adjustment for a keyword won't make your daily spend exceed the maximum 120%. 


Theresa
Google AdWords Top Contributor
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View solution in original post

Re: Limited by budget example from manual, please explain

[ Edited ]
Rising Star
# 2
Rising Star

This is the key sentence:

 

Since your increased resulting bid causes your ad to be eligible for more auctions, you would need to spend US$150 to acquire all the possible clicks for your newly available traffic. 

 

What this is saying that your ad is now available for traffic it wasn't available for before--traffic with more expensive clicks. The click cost in the example goes up because you are now competing for more expensive traffic.

 

The same clicks you would have received before will not cost more because you raised your bid, no. Some of your clicks will cost more--the clicks you would not have gotten before--but your daily budget is too low to allow you to serve ads for all of that more expensive traffic. That's how your campaign becomes "budget-limited."

 

So if the bid adjustment for mobile is raised to 2 $ , it shouldn't render the campaign limited by budget because the avg. cpc could be the same 0.5 $ due to low competition. 

 

You are the one assuming "low competition" here. The example didn't say anything about that. In fact, the example implies there's a lot of competition--that's why the clicks are more expensive.

 

Does that help clarify the example?


Theresa
Google AdWords Top Contributor
*~*~*~*~*~*~*~*

Re: Limited by budget example from manual, please explain

[ Edited ]
Collaborator ✭ ✭ ✭
# 3
Collaborator ✭ ✭ ✭

Thank you for answering, your reply does remove some of the blur from my glasses Smiley Happy

 

What I do not get is this "Since your increased resulting bid causes your ad to be eligible for more auctions"

 

If the user already had 200 clicks with an avg. cpc of 0.45 $ , much less than the 1 $ bid , then by raising the bid to 2 $ it only makes the keyword eligible for higher ad positions in my opinion. 

 

Why do they say that the ad would be eligible for more auctions because the bid was raised ?

 

Shouldn't the sentence rather be "Since your increased resulting bid causes your ad to be eligible for more clicks" (due to a higher ad position) ? I mean the impressions could be the same in numbers but the clicks would be more because the higher the Ad the easier it is to be noticed.

 

What about question 2 , can the daily spent be in this situation more than 120 % ? Or in other words, can the daily spent be over 120% in any setup caused by any missed setting ? This would help me avoid making rookie budget setups.

Marked as Best Answer.
Solution
Accepted by topic author Adrian B
September 2015

Re: Limited by budget example from manual, please explain

Rising Star
# 4
Rising Star

1) What this example is telling you is that there was traffic available for the search that was not available for a bid of $1.  When the bid was raised to $2, then the ad was able to compete for some of that traffic. Not all advertisers are able to spend the same amount--to offer the same amount for clicks. Ad serving is tiered to allow smaller (but still quality) campaigns to compete.

 

Aside from that, it's a mistake to assume that your keyword bid is what you'll pay for a click. Your keyword bid caps what you pay for a click. If you search for information on the ad auction (for example, here), you'll find a lot of good explanations on why your keyword bid and what you actually pay for a click can differ.

 

2) No, a bid adjustment for a keyword won't make your daily spend exceed the maximum 120%. 


Theresa
Google AdWords Top Contributor
*~*~*~*~*~*~*~*